Statement of reasons

This notice, which comes into force on the day after the date of its notification in the Gazette and expires on 30 September 2012, replaces the Securities Act (Stock and Station Agents) Exemption Notice 2002 (the 2002 notice).

This notice is on substantially the same terms as the 2002 notice. However,—

• the notice relates to the Securities Regulations 2009 (rather than the Securities Regulations 1983); and

• the notice no longer applies to Allied Farmers Limited.

The notice exempts any stock and station agent named in the Schedule from the following provisions in respect of certain debt securities:

• sections 51, 52, and 54 of the Securities Act 1978 (which relate to keeping registers of securities, inspection of those registers, and issuing certificates evidencing securities):

• various requirements in Schedule 2 of the Securities Regulations 2009 relating to the content of the registered prospectus (including certain requirements relating to the terms of the offer and the security).

The transitional provisions allow an issuer, in respect of a prospectus registered before the revocation of the 2002 notice, to continue to rely on the 2002 notice during the life of the prospectus.

The Securities Commission considers that it is appropriate to grant the exemptions because—

• the exemptions take account of the nature of the merchandise business conducted by stock and station agents. The transactions involve money owed by stock and station agents to clients being deposited to the credit of clients in a trade account pursuant to an agreement made between the agent and the client. Debt security obligations under the Securities Act 1978 arise automatically as a consequence of the merchandising transaction. The nature of the debt securities issued is the crediting or debiting of funds similar to that dealt with in a registered bank trading account. Whatever money is paid in putting the account into credit is equal to the amount of the debt security in dollar terms:

• the Commission understands that the volume of clients traded with by stock and station agents, and the manner of crediting to stock firm trade accounts on an irregular basis, makes it impractical for the stock and station agents to issue certificates or maintain a register:

• it is also impractical for the agents to determine certain information that would otherwise be disclosed in a registered prospectus (for example, the maximum amount of securities that should be made available for subscription at any one time, and accordingly the price, net tangible asset backing per dollar of securities offered, and issue expenses). This is because the issuing of debt securities is entirely within the hands of the clients:

• the exemption from the requirement to specify all terms of the securities in the registered prospectus is provided because the trade account and deposit account arrangements are essentially contractual in nature and may vary from client to client. Accordingly, it is not practicable to provide all details of such a wide range of variables in the registered prospectus:

• this notice continues exemptions provided from the Securities Act 1978 previously provided in the 2002 notice, and provides for existing exemptions from provisions of the Securities Regulations 1983 to be provided in respect of equivalent provisions of the Securities Regulations 2009 (with the effect that any stock and station agent named in the Schedule will be able to continue to rely on those exemptions in respect of offers of securities under the Securities Regulations 2009). While the changes in the Securities Regulations 2009 will reduce costs for issuers and improve information for investors, they do not attempt to tailor disclosure requirements for the vast range of persons to which securities law requirements apply. Accordingly, the new regulations have not addressed the difficulties faced by stock and station agents in complying with these particular regulations, and exemptions from the equivalent provisions continue to be required, and remain appropriate in light of the policy in the 2002 notice:

• the transitional provisions reduce the short-term compliance costs resulting from the regulatory changes for issuers that have previously relied on the 2002 notice.